It is a real honour to be here at the prestigious Nobel Institute. It is also a real pleasure to be the guest of the very active – and highly successful – Norwegian Atlantic Committee. Mrs. Hansen Brundt, Mr. Engebretsen, thank you very much for your strong efforts to promote our NATO Alliance here in Norway. And thank you very much for hosting me at this very important conference.

I am also very pleased to share the stage with Minister Espen Barth Eide. We have met many times in recent years, including when you addressed the North Atlantic Council last November. I remember you speaking very persuasively about developments in the High North, the implications for your country, as well as the NATO dimension.

This is not my first time in Norway. My most memorable visit was when I worked at the US Embassy in London in the 1980s, and was asked to accompany a group of British MPs on a visit to NATO’s Northern Flank, which included a stop at the Norwegian-Soviet border at Kirkenes. Let me just say it was a chilling experience -- in more than one sense of the word.

Today, thankfully, the Cold War is long behind us. We live in a very different world: a world that is much more interrelated, and in many ways much more complex; a world with fresh opportunities, but also new risks and threats; a world in which our NATO Alliance has lost none of its relevance – but in which it will need to adapt, transform, and reinvent itself – just as it has done successfully many times in the past.

Next year will see the end of our ISAF mission in Afghanistan. We are already preparing a new mission to train, advise and assist the Afghan security forces. Now, I have no doubt that there will be other operations and missions we will need to conduct in the future. But with the end of ISAF, our operational tempo is likely to decrease. This means we will need to shift our emphasis from operational engagement to operational readiness.

At the same time, the economic situation will remain challenging for many of our nations. It will test our solidarity, and it may well widen the capability gaps that we already see between many Allies – between those who are able to hold the line on defence spending, and those who feel obliged to make further defence cuts.

Finally, of course, the geopolitical landscape will continue to change. The strategic centre of gravity is shifting from Europe to Asia. The United States is already adjusting to this reality. Europe cannot and should not insulate itself from this development.

Taken together, all these developments pose a challenge for NATO. But NATO thrives on challenges. And we have got a pretty good success rate in meeting them.

For almost 64 years, the Alliance has demonstrated that it can, and will, safeguard the security, and the freedom, of its members. Since the end of the Cold War, we have shown that we have the capacity to take in new members and expand the zone of security and stability in Europe, erasing Cold War dividing lines. And we have shown that we are able to respond to crises when necessary, both close to home – such as in the Balkans and Libya – and also at strategic distance, as in Afghanistan. We must continue to be able to do this in the future.

The good news is that we already have a solid conceptual basis for keeping NATO strong. At our Summit in Lisbon two and a half years ago, we adopted a new Strategic Concept for our Alliance. It describes the risks and threats that we are up against. And it highlights three essential core tasks to meet the Allies’ individual and shared interests – collective defence, crisis management, and cooperative security.But in order to carry out these tasks successfully, we need the right forces and the right capabilities. And at a time of financial difficulties for many of our nations, acquiring those forces and capabilities has become a formidable challenge.

At our most recent NATO Summit in Chicago last May, our Heads of State and Government set the goal of “NATO Forces 2020”: modern, tightly connected forces that are equipped, trained, exercised and commanded so that they can operate, together with other allies – and with partners – in any environment.

To help us reach this goal, we also agreed at Chicago to pursue two separate initiatives: Connected Forces and Smart Defence.Smart Defence is meant to be a new guiding principle for capability development. The aim here is to encourage multinational solutions to both maintaining and acquiring defence capabilities – in other words, nations working together to deliver capabilities that they cannot afford alone.

Connected Forces has garnered fewer headlines, but it’s just as important as Smart Defence. Its objective is to maintain and strengthen the readiness and interoperability of our forces, even as our operations draw down.

We will place a greater emphasis on NATO-led training and exercises, taking into account the specific regional knowledge and expertise of countries, including that of Norway and its Nordic neighbours. We also want to make better use of computer-assisted training and simulation.

And we will take advantage of the U.S. offer to rotate elements of a U.S.-based combat brigade to Europe on an annual basis for exercises that can help turn the NATO Response Force into an effective, deployable capability, one that has experience operating in different environments and addressing different scenarios. (In this regard, I applaud Norway’s efforts to focus NATO’s military command structure on the unique strategic challenges in this and other regions of the Alliance, rather than taking a one-size-fits-all approach.)

We are off to a good start in implementing both Smart Defence and the Connected Forces Initiative. But it is vital that we maintain the momentum.

Our Libya operation two years ago demonstrated that European Allies and Canada can take the lead in NATO-led combat operations – and Norway’s air force performed brilliantly. But Libya also confirmed the Alliance’s over-reliance on some critical U.S. capabilities, especially strategic enablers like Intelligence, Surveillance and Reconnaissance, and air-to-air refuelling.

This transatlantic capability gap is simply not sustainable in the long term. First, the fiscal crisis has hit the United States as well, and it will be cutting defence expenditure in the coming years (although hopefully avoiding the meat-axe cuts required by “sequestration”). The U.S. also has a revised defence strategy that shifts the emphasis of its force posture from Europe to the Middle East and the Asia-Pacific region. Against this backdrop, the Obama Administration has made it very clear that it wants European Allies to take on a bigger share of the burden for Alliance defence in general, and for European defence in particular. And on Capitol Hill, you hear more and more voices – on both sides of the political aisle – saying European nations are “freeloading” at the expense of the United States, and preferring social security to hard security.

I often remind my American colleagues that the picture is not all negative. For example, since the end of the Cold War, European Allies have deployed more troops on more NATO operations than ever before. And they are the backbone of NATO in some key areas, such as the detection and destruction of mines at sea, and dealing with the consequences of chemical, biological and nuclear attacks.

European Allies are also involved in every single one of the 24 Smart Defence multinational projects that we have agreed so far. They lead roughly two-thirds of these projects, and one-third are purely European in terms of their participation.

But, if we want to ease the current over-reliance on the United States, and ultimately to end it, then we should be aiming for the day when no single Ally needs to provide more than 50% of certain critical NATO capabilities. This means that European Allies must engage more fully in Smart Defence , and in more Smart Defence projects, to address the more pressing capability gaps. I am confident that Norway will play a full part in these efforts.

Now of course, there is another way of looking at this. The fact is that no single European Ally – not even the UK, France or Germany – can deliver a full-spectrum capability alone. Mali is a case in point. So I would suggest promoting efforts – in both NATO and the European Union – to work towards a collective European full-spectrum military capability to balance that of the United States. This would enable European Allies to play a bigger role in future operations, whether led by NATO or in another framework.

Inherent in this approach is a recognition that burden-sharing is not solely a transatlantic issue. There is an intra-European dimension to this debate as well. That means we must address the different concerns and priorities of European nations. But it also means that we must find a balance between the ambitions and aspirations of the European Union, on the one hand, and NATO’s own policies and requirements, on the other.

And it must fully respect the interests of all countries – including those like Norway and Turkey – that belong to only one of those two organizations, but which can be major contributors to European defence.

There are significant differences among European nations, in their perceptions of the threat and in their level of political will to address defence and security issues. A genuine European full-spectrum capability would demand a viable contribution from all nations, big and small, from all corners of Europe. There are several ways in which we could promote that through NATO.

For example, several Allies have forged close partnerships during operations. In Afghanistan, the UK has worked well with Denmark and Estonia, and your country has worked well with Germany. As we draw down our operational engagements, we could build on the experience and common practices and procedures that have been developed in such partnerships.

We could also take another close look at nations specializing in specific areas. Today, this is mostly happening by default. Cost-cutting is forcing some Allies to opt out of certain capabilities entirely, without any prior coordination with other Allies or NATO force planners. In the future, if we can encourage specialisation by design, we can not only avoid creating new gaps, but also promote a more rational division of labor.

Finally, one other “smart” way for smaller nations to get more out of their individual defence efforts is by working together in regional groupings. Here, your own country has considerable experience, working together with neighbours with whom you share not only geography, but also values, culture and language.

Nordic defence cooperation has already helped to achieve greater cost-efficiency, including through the joint development and procurement of capabilities. It has helped you and your neighbours to pack a greater punch in operations, including in Afghanistan and in maritime and air surveillance. I believe it could also be an important building block for a wider, European full-spectrum capability.

Before I conclude, I would like to single out a particular Norwegian initiative for special praise. By sponsoring the participation of Sweden and Finland in NATO’s peacetime preparedness mission in Iceland next year, you are helping to improve our ability to work together as Allies – and with key partners. You are also demonstrating, once again, your ability to explore new and innovative approaches to building security.

Ladies and Gentlemen,

Solidarity, inclusiveness, transparency, determination, and innovation have been the hallmark of Nordic defence cooperation over the past few years. As NATO prepares for the future, we need to sustain those attributes across our Alliance more than ever before.

In the next few years, NATO will continue to respond and adjust to new geopolitical realities. We will make sure that our Alliance is both ready and able to fulfill its three core tasks, whenever and wherever our interests may be engaged.

This means we must complete the transition from a deployed NATO to a prepared NATO. It also means we must find new ways to generate new capabilities – and a new balance in our transatlantic relationship. A balance where a strong European defence capability will help sustain a strong US commitment.

With solid Allies such as Norway, and committed supporters such as the Norwegian Atlantic Committee, I have no doubt that our Alliance will – once again – meet the challenge of change.